Grain terminal dispute reaches beyond Northwest

The ongoing labor strife between longshoremen and the owners of six Pacific Northwest grain terminals has implications far beyond the local market.

Should negotiations devolve into a strike and cause six of the region’s nine grain terminals to shut down or reduce operations, it could block one of the nation’s biggest avenues for Asia-bound grain.

“This is very much a meaningful event,” said Ken Eriksen, vice president for transportation at Informa Economics, a Memphis-based consulting firm that helps companies manage risk in commodities markets. “It comes at a very precarious time. We just had harvest finished in the middle of the country.”

Representatives of six Pacific Northwest grain terminals — including four along the Columbia River in Portland and Vancouver, Wash. — have been in negotiations since August with local arms of the International Longshore and Warehouse Union.

But unlike grain terminals, the port’s container business serves predominately the local market.

The six grain terminals are among nine in the Pacific Northwest that have handled 30 percent of all U.S. grain exports so far this year and nearly half of the nation’s wheat exports, according to data from the U.S. Department of Agriculture.

That includes not only the wheat and barley produced in Oregon and Washington, but also corn and soybeans coming from Montana, Idaho, the Dakotas and Minnesota.

“In that realm, the reach of the Pacific Northwest hits hundreds of thousands of farmers’ livelihoods who are dependent upon trade for their commodities,” Eriksen said.

Though it’s likely the terminals would hire replacement workers in the event of a strike or lockout, some farmers have contingency plans.

Jeff Kaser is manager of Moro, Ore.-based Mid-Columbia Producers Inc., a cooperative that buys and markets the wheat produced by its 975 member farmers across north-central Oregon.

Kaser said one option is to direct more wheat into the feedstock market, where in recent years it’s become more desirable as the price of corn has risen.

Mid-Columbia could also send more grain through three terminals that aren’t party to the labor talks, such as the year-old EGT Terminal in Longview, Wash., which reached a new contract with longshoremen in February.

Either way, those Oregon farmers will still get paid for their grain, he said. Mid-Columbia has reached a deal with its banker for a larger credit line to continue payments.

“If we’re buying wheat from farmers, we have to continue to do that,” Kaser said. “If we can’t get it shipped or sold, the credit line will help us buy the time.”

Even if a work stoppage is short, there’s fear that the labor unrest could have a long-term impact on the region’s importance to the nation’s grain industry.

A disruption could make grain buyers aware of alternative shipping routes, such as the recently enlarged Panama Canal.

“If we start losing ships, the cost of the system has to be spread across a smaller group of ships,” said Jim Townley, executive director of the Columbia River Steamship Operators Association. “There’s a concern that it will drive costs to other areas, like corn.”

The concern isn’t originating solely from the U.S.

Eriksen made recent visits to Thailand and Barcelona where grain buyers were asking questions about the status of the Pacific Northwest labor situation.

“They’re looking at, ‘maybe we should be looking at alternative pipeline sources to keep our facilities running’,” Eriksen said. “There’s a great amount of uncertainty.”